Russia sells oil at a significant discount following Ukraine’s invasion, traders wary of sanctions

Russia’s crude oil is sold at record discounts as it faces severe sanctions from Western countries following an invasion of neighboring Ukraine, but traders are cautious and buy discounted fuels. I am refraining.

Moscow offers Urals crude oil at a discount of $ 11.60 per barrel over dated Brent. This is the deepest discount in 11 years, according to the data edited by. Bloomberg.. Dated Brent is a marker for physical oil trading. No bids were offered while the large bids for Ural crude were no longer sold. The trading divisions of Trafigura Group and Lukoil PJSC previously offered Urals crude oil at a discount of $ 6.30 per barrel.

“Russia-US tensions over Ukraine have helped close the Ural inequality,” wrote consultant Fact Global Energy. Note.. “After many European refiners started buying Urals in December / January, people with a choice now seem to be moving away from the Urals.” Multiple oil traders and oil tanker companies , And shipbuilders have temporarily suspended Russia-related activities.

Countries such as the United States, United Kingdom, Japan and the EU have all announced sanctions against Russia. More sanctions may be announced in the future. Oil traders choose to avoid trading Russian crude oil for fear that they may face the consequences of sanctions breaches.

Igho Sanomi, the founder of energy trading company Taleveras, expects Russia to be “very deep” in regulation. WSJ.. “We expect most European banks to withdraw from lending to Russian commodities. Letters of credit have been suspended and general financing for Russian commodities has been suspended. “.

A major European refiner told the media that they were “big buyers” of Ural crude, but stopped buying about a month ago.

Even if the US does not impose full sanctions, European buyers are likely to avoid Russian crude oil as long as tensions continue, according to oil analyst Alex Cavoris.

“I’ve heard that refiners are refraining from buying Urals, and many shipowners say they don’t know if they will call a Russian port (Black Sea or Baltic Sea),” said a European refiner buyer. Told. S & P Global.. A trader in the Middle East told the agency that such “extreme events” are unlikely to occur.

Upward pressure on Ural inequality also stems from fears of possible disruption of shipping activities in the Black Sea. Some shipowners are said to be very cautious about moving to terminals in the area.

Fares from the Baltic region have skyrocketed. The daily revenue of tankers carrying 100,000 tonnes of Ural crude from the Baltic Sea to Europe has skyrocketed by about 800%, indicating that very few shippers are willing to transport cargo from Russia.

While traders are avoiding Russia’s Ural Mountains, demand for crude oil from other parts of the world is rising, and locations such as the Middle East, West Africa and Brazil continue to grow. Cargo fares from the Persian Gulf to the US Gulf on Thursday increased by 12% compared to the previous day.

Naveen Athrappully


Naveen Athrappully is a news reporter covering business and global events in The Epoch Times.